With the arrival of spring one would think that our thoughts would turn to love. Nice but they must also turn to taxes and tax returns for the previous year. The upside is that if your “couple” status has changed in the previous year, it could positively affect your tax return. This would apply regardless of whether you entered into a marital or common-law relationship.
There are a number of factors that come into play here:
- Income level of each spouse/partner
- Available credits and the amounts involved
- Number of dependents
- Pensions by virtue of age
- Students involved
For starters it involves the transfer of unused credits from one spouse/partner to the other. In other words the credits need to be fully applied to the first person’s tax return first to take advantage of the allowable amounts. Residual amounts can be transferred or in some cases banked for future consideration. There is a choice here. Student tuitions would be an example of this.
Examples of credits that may be transferred include:
- Tuition, education and textbook amounts
- Disability amounts
- Age amount
- Pension income amount
- Caregiver amounts for children under 18 years of age
There is also the potential for pooling certain expenses and having one spouse/partner claim them all for convenience and maximum benefit. These would include:
- Charitable donations
- Medical expenses for yourself or your spouse/partner
- Medical expenses for either of your children born in or after 1998
- Medical expenses for other dependants like parents or grandparents
There are additional considerations for things like pension splitting and family tax cuts.
Keep in mind that all of this involves filing a “coupled” tax return. Each spouse/partner must still file an individual return and not a single return for both parties. The best way to do this is to have a tax specialist do both returns so that the appropriate transfers can be seen and moved properly.
Make sense? If not or if you need expert assistance in making sure the net result of your loving relationship is optimum tax returns, connect with us today. Taxes are what we do.